Charitable Fundraising – When Registration is Required in Multiple States
One of the most challenging aspects of charitable fundraising is navigating legal compliance issues, particularly when fundraising goes across state lines. Online giving and social media platforms have made it increasingly easy to solicit donations across the nation. However, most states and some localities have registration requirements for charitable fundraising, which can be extensive. If your charity is extending fundraising efforts to multiple states, then you must discern whether registration is required in each state and, if so, what steps you need to take to comply with that state’s registration laws.
Charitable Fundraising Registration Laws in General
The purpose of state charitable fundraising registration laws is to prevent fraudulent fundraising schemes and ensure that solicited donations go to legitimate charities. A state’s Attorney General’s office and/or Secretary of State are often responsible for monitoring compliance with registration laws, which often extend beyond completing a registration form and paying a fee. Depending on a state’s laws and regulations, charitable organizations may be required to file detailed financial statements, make specific disclosures to prospective donors and the public, and submit fundraising reports.
You should be aware that soliciting donations in some localities also may trigger registration requirements under municipal or county regulations. Therefore, before holding an event to solicit donations in any city or county, you must ensure all local registration requirements have been met.
Determining Whether Your Charity Needs to Register in a State
The need to register your charitable fundraising efforts in any state depends on the geographical scope of your fundraising. While a golf tournament or bingo night may be confined to the state or even the local community in which your organization is physically located, the advent of online fundraising has expanded the scope of many forms of fundraising. Whether your charitable fundraising efforts involve a “Donate Now” link on your website, a targeted email solicitation campaign, or a crowdfunding campaign on a fundraising platform, your charitable organization is likely to be subject to the registration requirements of a state. Since an online fundraising solicitation is typically visible to residents of the 40 states with fundraising registration requirements, and almost any type of fundraising triggers registration compliance, your charitable organization may need to complete registration in 40 different states. While these requirements may seem burdensome, compliance with charitable registration laws is necessary for your charity to remain in good standing and meet its legal obligations.
Furthermore, even states with charitable registration requirements have different exemptions for some charities. Depending on the state laws at issue and factors ranging from the size of your charity, the dollar amount of funds raised in the state, and the type of solicitation used your charitable organization may be exempt from the registration process.
Multistate Fundraising Raises Complex Registration Issues
Once your charity has determined the states in which it needs to register due to its fundraising efforts, it must familiarize itself with the registration requirements. Every state’s registration laws differ in that they may or may not apply to various charitable organizations, depending on the circumstances. One state’s law may define “fundraising” or “solicitation” quite differently than another. The registration time may vary, and deadlines and requirements for renewing registration may differ significantly based on the state’s laws at issue.
Keeping track of multiple deadlines, requirements, and applicability of state registration laws can be difficult to manage, especially for small charities. Furthermore, charities must remain aware of changes in the registration laws and how they affect their legal obligations.
Frequently Asked Questions (FAQ)
What are the Charleston Principles?
The Charleston Principles are the title of a multistate compact developed by the National Association of State Charity Officials (NASCO) to address charitable solicitation registration requirements nationwide. While the Principles are not binding, many states use them to establish a safe harbor for charitable organizations that fundraise in multiple states. Under the Principles, a charity remains in good standing if it is properly registered in its home state. Therefore, unless you are fundraising in one of the 17 states that formally have adopted them, you cannot assume that your charity will have a safe harbor under them. For instance, in California, your charity must register if it raises as little as $1.00 in donations from a California resident. Another seven states use the Principles as guidelines. Still, they will review online solicitations on a case-by-case basis. They also may consider additional factors in determining whether a charity is compliant with a state’s charitable solicitation registration laws.
Is there a nationwide portal where a charity can simultaneously register in multiple states?
No. Since charitable solicitation registration laws are based on state law, each state sets its own requirements, scope, and deadlines. Charities must submit individual registration forms, along with other required documentation and fees, directly to each state in which they want to register.
Is there a cost for charitable solicitation registration?
Most states charge registration fees, renewal fees, and late fees for untimely registration or renewal filings. Charities also may incur costs in preparing financial statements, gathering documentation, and paying staff to complete and monitor compliance.
Call the California Center for Nonprofit Law Today
Charitable fundraising registration laws are complex and ever-changing. We aim to inform you of legal changes that affect your charitable organization. If you need legal advice or assistance, we are here to help. Contact an experienced nonprofit lawyer today. Contact the California Center for Nonprofit Law offices at (949) 892-1221, email us at info@NPOlawyers.com, or visit our website for more information today. We offer a wealth of experience handling the unique legal issues that charitable organizations routinely face.